Gain from Foreclosure

Not every foreclosure is a loss for the homeowner; under certain circumstances a small number of individuals may realize a gain from foreclosure.  Because a foreclosure is treated as a sale for tax purposes, there may be taxable gain to report as a result of the foreclosure. If the property was used as the principal [...]

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

For most individuals, a foreclosure will result in a Cancellation of Debt (COD) by the lender.  Normally, debt that is forgiven or cancelled by a lender must be included as income on tax returns and is taxable.The Mortgage Debt Relief Act of 2007 was enacted to allow taxpayers to exclude up to $2 million (if [...]

When Payments Can’t Be Made – Short Sales

In today’s economic crisis, many homeowners who purchased homes in the past five to 10 years are finding that their homes are now worth less than what they’re paying on monthly mortgage payments.  Some people are continuing to pay on the mortgage, hoping for an eventual uptick in the housing market.  Others have had no [...]

Tax Consequences of Mortgage Modification

An Alternative to Foreclosure – Loan Modification In today’s housing crisis, foreclosure has become an everyday term. However, it is not the only answer for homeowners who can’t make their mortgage payments. For homeowners who want to fight to keep their homes, there are opportunities to change their existing mortgage arrangement, including pursuing a loan [...]

Tax Consequences of Foreclosure

Over the last few years foreclosures have been a top news story. Surprisingly, what has received little coverage is the potential tax implication of foreclosure. Many people may think that a bank foreclosure ends the financial nightmare and are surprised when they receive a letter from the IRS about taxes due in connection with the [...]